Erke's donation went viral — a struggling Chinese brand saved by 50 million yuan

Erke (Hongxing Erke) was founded in 2000 as a Chinese sportswear brand. By 2021, the company was struggling. In 2020, the company had 2.8 billion yuan in revenue but a net loss of 220 million yuan. The first quarter of 2021 saw another 60 million yuan loss. The company's stock had been suspended from trading. Erke was a brand most Chinese consumers had forgotten.

In July 2021, catastrophic floods hit Henan province. Erke donated 50 million yuan (about $7.7 million) in materials to flood relief efforts through the Zhengzhou Charity Federation and One Foundation. The donation was a significant sum for a company in financial trouble. Netizens noticed the contrast between the company's losses and its generosity, and the story went viral on Weibo.

The response was unprecedented. Over 8 million people flooded into Erke's live-streaming rooms, shouting 'wild consumption' (野性消费). Sales surged 52x on July 23 compared to the same day the previous year. On Douyin, sales from July 21-23 exceeded the brand's entire first half of 2021. Inventory ran out. The live stream hosts had nothing to sell and began performing to entertain the audience. Netizens even topped up Erke's Weibo membership to the year 2140. The founder Wu Rongzhao appeared on live stream and urged people to 'consume rationally.'

The hype gradually faded, but the brand had been transformed. In July 2022, Erke announced a 100 million yuan donation to the Fujian Disabled Persons' Welfare Foundation. The brand's reputation as a generous, patriotic company was cemented. A struggling brand that had been all but forgotten was saved by a charitable act that went viral beyond anyone's expectations.